Real Estate (11)
What do real estate "marketers" who were in high school or university a just over a decade ago, who became "marketing experts" in real estate and old-school sales guys have in common? The first group, the "marketers", learned their trade in the hottest market ever in the history of real estate. The second group, the sales guys, hasn't had to change a thing for more than a decade, or two (or three or four or even five!). The Internet and information were held close to the vest through the MLS.
Where were today's marketers in the mid-eighties? Many of them were in high school. So - a wise person might ponder - what is their experience in a tough market?
Over the last four days, I've talked about the dangers of developers and sales people "knowing too much" and thus not doing the jobs they should be doing. Yesterday, I spoke about what can happen when a Print Media Expert is hired to do an Online Media Expert's job. Today, I'm going to switch gears a bit, though, and wrap up this week with one of the biggest mistakes I see developers making today.
Mistake #5 - Waiting for the Market to "Come Back". The market is ripe for buyers right now. The main mistake developers make is they are waiting for the "market to come back" while at this very moment discerning buyers are looking hard at where they will buy.
Yesterday I discussed the mistake developers often make in presuming that they themselves are Media Experts. In that same vein, I will show you today how hiring a Print Media Marketing Expert is a not only an outdated but also wasteful mistake many developers often make.
Mistake #4 - Hiring a Print Media Marketing Expert. Print media is not a dinosaur - it's an albatross. The problem with print media marketing agencies is a two-headed one: First and foremost, they are excessively expensive, with no real proven ROI. At 15% - 30% , why would any well founded print media marketing company mess with the web? The fact of the matter is that they don't really use online marketing beyond instances when they are forced to. Second, on the rare occasion that they do decide to utilize online marketing strategies, their vacuous knowledge of this very different technique forces them to lean heavily on their print media background, thus costing their developer clients tens of thousands of wasted dollars.
Just as dangerous as assuming a salesperson has an intimate knowledge of media and marketing - as I touched on yesterday - is a developer who assumes that he or she has that same intimate knowledge.
Mistake #3 - Being a Media Expert. Would a developer hire a general contractor to do an architects job? "Hey, here's a piece of property, Joe. Go ahead and build something, we'll get it sold..." I don't think so, either.
An excerpt from a conversation between Michael Tuff, CEO of Racaria Capital Financial Solutions and Myself
MT: Why has it been so difficult for the process of buying real estate to make the jump onto the internet?
TV: Because the MLS was designed to make it impossible. To buy a house or a car, you need to see it, right? So the MLS system evolved to make real estate agents indispensable. We have traditionally paid tens or hundreds of thousands of dollars to get the key, get in, look around, get the "feel" of the place. However, more and more people are now coming to realize it's not really worth $50,000 to get a key and take a look around.
Yesterday, I spoke about the first mistake any developer can make in project marketing and sales. As I said, I've seen a lot of developments stall or self-destruct at the hands of a developer who felt like he or she "knew it all." I told you about my friend the hotelier, who became a developer, then a travel "guru," then a marketing and sales "expert" capping off this illustrious and varied career with a stint as a financial products broker. His development is still just a patch of dirt.
Continuing in the same vein of "knowing it all," today I'll tell you what I've seen happen to developers who entrust their marketing efforts to brokers and sales people. Until recently, I've seen a lot of luxury brokerages trick developers into thinking that they were the total solution - a sales and marketing firm. I'll show you why sales and marketing under one roof make ineffective and wasteful bedfellows.
I've recently watched several developments either stall, or implode completely. This is not because of the economy, nor is it because people aren't buying. Rather, it's because the developers "knew too much" - or so they thought. In order to sell a partially completed project, a new development, or a completed project with the balance of inventory, developers need to wake up and get into the Connected Market Space where 85% of buyers are searching or "hiding out".
How can properties that are so beautiful - situated on a magnificent oceanfront, in the perfect untouched mountain valley or in one of the world's many vibrant and lively cities - be doomed to fail? Over the next five days, I'm going to outline the five most common mistakes that I see many developers continuing to make in their efforts to market their project.
After nearly half a decade of research and development, and a couple of decades in experience, RealEstock is born.
On March 25th, 2008 we announced the launch of RealEstock.com - I encourage you to visit, if you haven't already, and begin to understand the meaning and significance of what RealEstock.com is today for the real estate, and considering the current global financial scene, for the related sectors of finance and mortgages.
[NOTE: The market trends we are basing the RealEStock.com model on – RealEstock.com is a new distribution model – beyond just “pretty pictures” ... this blog stream of thought is the beginning of a series on the current real estate market ... ]
First, please excuse the “academic” nature of this article – I realize I am going back to my old “Professor Vasko” days. However, I felt an overwhelming urge to run through a discourse on what’s really going on in the financial and real estate markets. Mostly because, right now is a great opportunity for “smart money” looking to buy real estate from around the world and for our RealEstock model … so here I go ...
Assume a $400,000 home in California became an $700,000 home in the period of a few years based on no real tangible value – here’s how:
Side note for mathematicians: I'm taking the liberty of the J.M. Keynes approach to this economic analysis and the numbers - ' I'd rather be approximately correct, than precisely incorrect...' (I've also heard this "approximate" quote attributed to W. Carr). Thus, if my math is "off" don't get too hung up on the figures - the concept is to identify economic reality, not the ten grand here or there of value ...